Marel provides pet meals processing by buying Wenger

Tailored from a press launch:

Marel agreed to amass Wenger Manufacturing, a processing tools producer centered on pet meals, plant-based proteins and aqua feed. The acquisition of Wenger is a platform funding into new, complementary and engaging development markets for Marel. Pet meals processing tools will type the fourth enterprise phase alongside poultry, meat and fish. The acquisition is topic to customary closing circumstances similar to anti-trust and approval of Wenger’s shareholders. The deal is anticipated to contribute roughly 10% of Marel’s complete revenues and 12% of EBITDA.

“The Wenger acquisition is in keeping with our vison of a world the place meals is produced sustainably and affordably,” Arni Oddur Thordarson, CEO of Marel, stated in a press launch. “All through the years, Marel has step by step expanded its taking part in subject. This platform acquisition will add the fourth enterprise phase to our enterprise mannequin, along with the poultry, meat and fish segments, the place we’re a world chief in processing options, providers and software program. On a proforma foundation, the brand new phase will account for round 10% of revenues and 12% of mixed EBITDA. We see quick alternatives for development and worth creation by leveraging Marel’s world attain and digital platforms in Wenger’s sizable addressable markets. The 2 firms have complementary applied sciences and a product portfolio that can speed up the journey to turn into full-line suppliers within the respective fields.

The entire funding for the acquisition is US$540 million. Thereof, US$530 million is the acquisition worth on a money and debt-free foundation (enterprise worth). The remaining US$10 million is a mix of a contribution to a not-for-profit non-public basis, to proceed the legacy of Wenger and its significant affect on the neighborhood, in addition to Marel shares for Wenger workers.

The acquisition worth will probably be paid with money at hand and current credit score services. Dialogue with promoting shareholders relating to partial consideration in Marel shares is ongoing and will probably be concluded previous to closing. The transaction may also end in anticipated tax advantages of USD 60-70 million and the adjusted transaction a number of corresponds to round 14x EV/EBITDA.

Marel has complementary product portfolios and geographic presence with Wenger’s extrusion and dryer know-how centered on the excessive development markets of pet meals, plant-based proteins and aqua feed.

Based in 1935, Wenger has 500 workers and revenues in 2022 are anticipated to be US$190 million, EBITDA US$32 to 35 million, and EBIT margin 14 to fifteen%.

In response to Petfood Trade’s Listing of Suppliers, Wenger extrusion programs are acknowledged around the globe because the premier alternative for pet meals manufacturing. The corporate’s tools line consists of 14 sizes of extruders – each single screw and twin screw with capacities as excessive as 22 tonne/hour. As well as, Wenger designs and manufactures horizontal dryers and toasting ovens, enrobing tools, and ancillary {hardware}, all of which can be computerized, built-in and automatic for full course of administration.

Profitability forecasts of pet meals trade acquisition

Complete funding for the acquisition is US$540 million. Professional-forma leverage following completion of the acquisition is estimated at round 3x web debt to EBITDA, in keeping with Marel’s focused capital construction of 2-3x web debt to EBITDA. The acquisition is totally in keeping with Marel’s 2017-2026 development technique which targets 12% common annual enhance in income by a balanced mixture of natural and purchased development.

The 2 firms have a strategic and cultural match with complementary product portfolios and geographic presence, making a platform to boost additional development. Wenger has a diversified and dependable buyer base starting from blue-chip pet meals processors to startup firms in plant-based proteins. This has resulted in wholesome profitability, robust money circulation and strong return on invested capital.

The addressable marketplace for Marel and Wenger in options and providers inside pet meals, plant-based proteins and aqua feed is estimated to be round EUR 2 billion with anticipated annual development of 4 to six%, in keeping with Marel’s long-term market development expectations . Marel goals to develop sooner than the market, primarily based on its steady innovation and world attain.

Extra on Marel

All through the years, Marel has step by step expanded its taking part in subject and is now the one pure-play supplier of full-line options, software program, and providers to the poultry, meat, and fish industries. Within the imaginative and prescient solidified in 2016, the scope was widened from the three animal proteins to focus extra typically on reworking meals processing. In 2020, Marel introduced an elevated give attention to adjoining markets and in 2021 it formally established a enterprise growth division centered on pet meals and plant-based proteins. Including Wenger’s robust capabilities in that space, Marel is accelerating its journey and is effectively positioned to capitalize on offering transformational options to the massive and engaging development markets of pet meals, plant-based proteins, and aqua feed.

Marel sees nice alternatives and is dedicated to spend money on the mixed enterprise to speed up development. The acquisition is anticipated to be margin and earnings enhancing. Deliberate initiatives embrace increasing manufacturing capability to reply to excessive demand in Wenger’s core markets. Aftermarket revenues signify over 40% of Wenger’s revenues, and Marel’s world attain and digital platform will assist a extra proactive aftermarket method to raised service prospects around the globe.

The acquisition will probably be financed by Marel’s robust stability sheet and current credit score services. To protect operational headroom, Marel has signed a EUR 150 million bridge facility from BNP Paribas Fortis SA/NV. Assuming a full money cost, pro-forma leverage following completion of the acquisition is estimated to be round 3x web debt/EBITDA, in comparison with Marel’s focused capital construction of 2-3x web debt/EBITDA.

The closing of the acquisition is topic to customary closing circumstances, together with anti-trust and shareholder approval of Wenger, which is anticipated to happen throughout Q2 2022.

.

Leave a Comment